2009 has been a challenging year for businesses around the world. But some countries have weathered the economic tsunami better than others, and with recovery beginning to take shape around the work, Vietnam’s business leaders expect to return to double-digit growth in 2010, according to the latest edition of the Nielsen Vietnam’s Business Barometer.
“It will be quite a stretch for business leaders to expect double-digit growth when Vietnam’s 2010 GDP is estimated to be at a modest 5.5 percent,” said Vaughan Ryan, Director at The Nielsen Company Vietnam. “But the sentiment shared by business leaders shows that there is good momentum among many industries, especially fast moving consumer goods, and they’ve planned well to ride out the recession and even see growth where many businesses are copping losses.”
Competitive pressure and growth targets are business leaders’ top concerns, with 68 percent, followed by the ability to pass on price increases (45%), inflation (42%) and low GDP growth (31%). More than two-thirds (70%) believe business conditions have improved versus a year a go, in contrast to just 40 percent who said the same in the March edition of the survey.
While there has been a lot of talk over the past year about the move towards premium products and services by the increasingly-affluent Vietnamese, 48 percent of business leaders believe that consumers will move towards purchasing on promotion and 31 percent believe consumers will “trade down” to cheaper products over the next six to twelve months.
Many businesses around the world focus on urban consumers, however in Vietnam, appealing to rural consumers – who make up more than 70 percent of the total population – is critical to renewed growth. Almost 80 percent of businesses claim that they will look to the rural markets to further growth compared to 64 percent in the previous edition of the survey.
“Unlike the rest of the world, rural Vietnam is in many cases growing faster than urban areas. It’s crucial for businesses to have a strong presence there. In some cases, rural value growth rates has surpassed urban by as much as 9 percent versus a year ago in certain consumer goods categories,” said Ryan.
As a result of this optimism, advertising spending is expected to post a strong increase. Half of all business leaders surveyed said they expected to increase ad spend (up from 39% in March). All media are likely to benefit – TV (29%), point-of-sale materials (55%), print (27%), in-store banners (44%) and outdoor posters (20%). Most notably, business is expected to increase ad spend online by 54 percent over the next six to twelve months.